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Buoyed by the recent move by Korean car-maker Hyundai to transport its cars (about 800 of them) through sea for the domestic market, ports feel that this virtually unlocks huge potential for coastal shipping in India, especially for automobiles cargo.

India has already established itself as a major automobile manufacturing hub with most vehicles sold in the country being made domestically. This necessitates huge cargo movement (by rail and road networks) from the manufacturing clusters (like Chennai, Pune, Gujarat, and National Capital Region) to the consumption centres spread across the country.

Hyundai Motor India Ltd (HMIL) recently shipped 800 cars made at its Chennai plant to its markets in western India using a Roll on-Roll off (Ro-Ro) vessel called MV IDM Symex. The cargo was loaded at Chennai Port and reached Pipavav Port in Gujarat last week.

Chennai Port's deputy chairman, Cyril C George said, "We see a lot of potential in this kind of movement of cargo. It is cheaper than the road route, and we are expecting the Ministry of Shipping to announce an incentive scheme for such traffic soon, and that would give further impetus to transhipment." He added that Chennai Port is already in talks with car makers like Nissan, Ford among others to use the sea route to transport their cars within the country. George further said that Hyundai has committed to continue with its shipments at Chennai Port.

A Janardhana Rao, adviser (Sagarmala), ministry of Shipping, Government of India told Business Standard that indeed a scheme to boost coastal shipping was on its way, and a formal announcement is likely soon. There might be a cash incentive of Rs 3000 per car to boost coastal shipping and so that car manufacturers adopt a more eco-friendly mode to transport their cargo.

Ravi M Parmar, chairman of Kandla Port Trust, a major port in Gujarat said that as such there is a 40 per cent concession in cargo related charges for coastal shipping in all major ports. "The cost of transporting a car basically works out to be around Rs 4,500 per car or something. Now, with the Shipping Ministry incentive on the anvil, it would become very affordable for automobile players," he said.

Kandla Port too is in talks with auto majors like Maruti Suzuki India Ltd and Ford India to start container traffic movement at the port, however, Parmar clarified that nothing is concrete yet. "We have not been focussing on car movement at our port, but now with Gujarat becoming a major production hub, we are now looking at opportunities in the sector," he said.

Pipavav Port, which already handles export cargo of Ford India, feels that once the incentive scheme is on, this would encourage manufacturers to pull the cargo off the roads and take the sea route. "The volumes that can be handled in a sea vessel, a Ro-Ro vessel here, are much larger compared to what can travel on trucks," said Keld Pederson, managing director, APM Terminals Pipavav, Gujarat Pipavav Port Ltd. As for revenue generation through this new route, Pederson felt that it was too early to comment.

However, ports also feel that there is a risk involved in setting up dedicated or standalone terminals for cars. As Parmar highlighted, "Chennai Port handles around 250,000 cars per year (for exports), and that is amongst the highest in the country. However, in case of exports, with fluctuations in international currencies, global companies often change their export policies in accordance with movements in the international markets. Therefore, this can be considered as volatile cargo."

Movement of cargo within the country, thus, appears to be a more assured cargo for ports. A major private port in Gujarat Mundra Port, which already handles MSIL's cargo, is upbeat on the scope too. A senior official at the port admitted that while transhipment had not started at the port, it has already approached companies like MSIL for the same.

With the Union Shipping Ministry relaxing cabotage policy, such transhipment has become possible. The cabotage policy in India till date allowed first preference to Indian flagships over cargo and foreign ships.